Individual or audit firm can become the first auditor Tof the company according to the companies act 2013.No other person can be appointed as an auditor of the company. The first auditor of the company should be a Chartered accountant.
After annual general meeting within 30 days, a financial statement along with the auditor’s report shall file with the register of companies.
Each tax filing needs a comprehensive report from the auditor, in every financial year a private limited company is required to submit its audit, reports duly assessed and checked by an auditor as well as the other requirements Sections 139 to 148 of the Companies Act 2013 gives a complete and detailed summary of the role of an auditor.
Chartered accountant firm’s registration number must be there in the company’s resolution for the appointment of the first auditor. Till the conclusion of the first annual general meeting, the first auditor shall hold office. The company needs to convey an extraordinary general meeting by issuing a notice to all the members in writing, in case board of directors failed to appoint the first auditor within 30 days of incorporation. Such members within 90 days from the date of failure to appoint shall appoint the first auditor in the extraordinary general meeting.
APPOINTMENT OF FIRST AUDITOR
Within 30 days of Incorporation, the first auditor of the company shall be appointed by the Board. An EGM shall be called within 90 days to appoint the first auditor In the case of Board’s failure to appoint the first auditor as per Section 139(6). The 90 days time limit starts from Incorporation of the company rather than the expiry of 30 days(i.e. failure of Board) however, the law is silent regarding from when this time limit of 90 days be reckoned.
Tenure: – Till conclusion of the 1st annual general meeting.
Remuneration of the first auditor can be decided by the Board As per proviso to section 142(1) of company law.
Appointment of 1st auditor require obtaining written consent, certificate and filing of form ADT-1.
Section 139(6) governed the appointment of first auditor, non-obstante clause [notwithstanding anything contained in sub-section (1)] and it is sub-section (1) require obtaining consent & certificate from auditor and filing of form ADT-1 with ROC.
Interpretation of “notwithstanding anything contained….”: – the non-obstante clause is used to avoid the operation and effect of all contrary provisions as per Supreme Court view. Thus, the no-obstinate clause will prevail In case any departure between a non-obstante clause and other provisions.
Since Section 139(6) does not speak anything contrary to Section 139(1) as far as obtaining of consent, certificate and filing of a form are concerned. Thus, it can be interpreted that ADT-1 should be filed with ROC for first auditor appointment.
- Convey the message to the proposed auditor as regard to the intention of appointing him/it as auditor whether he/ it is eligible and not disqualified to be appointed as auditor of the company.
- Obtain consent & certificate from auditor.
- Obtain recommendation of the audit committee if it is required to be constituted.
- Call Board meeting.
- At the first board meeting approved the appointment of auditor.
- Intimate the auditor and file with ROC form ADT-1(to be attached in form GNL-2 as per MCA circular 09/2014 dated 25th April 2014) within 15 days.
APPOINTMENT OF AUDITOR AT 1ST AGM
Every company shall appoint an individual or a firm as an auditor of the company in its 1st annual general meeting who shall hold office from the conclusion of that meeting, till the conclusion of its sixth annual general meeting as per Section 139(1) of the Act.
Tenure subject to ratification: –
At every AGM the tenure of 5 consecutive years is subject to ratification by shareholders.
Remuneration of the auditor of a company shall be fixed in its general meeting as per section 142(1) of the Act or in such manner as may be determined therein.